50 to 1
Utah’s residential real estate market has been on quite a roller coaster ride in recent years. Calendar year 2003 saw Utah homes rank dead last in the nation in average price appreciation, with a miniscule 1.61% rise.

Step forward three years. Utah’s average home price appreciation of 17.55% during 2006 ranked #1 in the nation. By comparison, the average U.S. home value rose 5.87% during 2006, with dozens of housing markets seeing modest price declines.

The Office of Federal Housing Enterprise Oversight (OFHEO) is considered an accurate indicator of home prices. The data measures repeat sales and refinancings of millions of existing homes since 1975 in more than 375 communities.

While many homeowners and the media focus on the latest 12-month data, a five-year measure of price changes is of value. The average American home value rose 55.21% between 2001 and 2006. By comparison, the average Utah home rose 43.93%.

Various Utah communities also ranked high in 2006 with Provo-Orem ranking third (one-year and five-year appreciation rates of 19.92% and 38.59%, respectively). Salt Lake City ranked fourth in the nation with average home price increases of 19.76% and 48.98%. Ogden-Clearfield ranked 14th, with home prices rising 15.30% and 30.51%. Logan saw average home values rise 7.33% and 24.82%, while St. George saw prices rise 12.30% and a sizzling 84.48%.

Another major measure of home values—calculated by the National Association of Realtors—noted the median (half cost less, half cost more) existing American home value declined by 2.7% in 2006. Salt Lake City ranked 2nd of 149 metro areas surveyed, with a median price gain of 22.7%.

Utah home values are likely to rise at lesser rates during 2007 and into 2008. A housing bubble? It appears to be deflating on both coasts and in the Southwest (see U.S. Economic Outlook for more housing detail).

The Wasatch Front commercial real estate sector is running flat out with demolition of the first of two downtown Salt Lake City shopping malls having begun. The $1 billion plus investment by the Church of Jesus Christ of Latter-day Saints into new residential, office, and retail space over the next four years in that location promises to help redefine the downtown landscape for generations to come. In addition, dozens of other commercial projects are underway around the state.

Tight and Tighter
The Utah economy continues to rank as one of the nation’s “top five” job creators. The Utah economy added 52,000 net new jobs over the most recent 12-month period, a powerful 4.4% growth rate. As before, all 11 major Utah employment sectors continue to add to job totals, led by gains in construction, trade, professional & business services, education & health care, and manufacturing.

Strong Utah job creation of the past three years has led to the tightest labor market ever experienced. The Utah unemployment rate averaged 2.5% in recent months, the lowest on record and also the lowest in the 48 contiguous states. Such tight labor availability has occurred even as the flow of new residents to the state rose sharply in 2005 and 2006.

Rising Wages
Extremely tight labor availability has led to expanded employment opportunities for thousands of Utah residents. Limited worker availability has also led Utah wage levels sharply higher. The most recent data notes the average weekly wage in Utah rose 8.9% in the 12-month period ending March 31, 2006 (U.S. Bureau of Labor Statistics). The comparable rise in Salt Lake County was 9.4%. By comparison, the average U.S. weekly wage rose 8.1%.

The average Utah wage still trails that of the U.S. However, the combination of a younger average Utah worker and the largest share of part-time workers in the nation (primarily students) account for much of the difference.

Many Utah companies note their frustrations in filling open positions and pressures in retaining key employees. Such concerns are most prominent in the small business sector, where many firms cannot offer wage levels and benefit packages to match those of larger employers. However, those firms willing to pay higher wages, as well as firms that enjoy solid reputations as employers, are having many fewer labor availability problems.

Utah Outlook
The Utah economy continues to rank with the best in the nation, a position likely to be maintained over the next 18 months. One of the nation’s tightest labor markets is forcing wages higher, good news for Utah workers. The Utah real estate sector is healthy, with more moderate price appreciation expected over the next 12-18 months.

Back